American Media, Inc. Reports Fourth Quarter and Fiscal 2005 Year End Results.BOCA RATON Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , Fla. -- American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Media, Inc. (AMI), the nation's largest publisher of celebrity, health and fitness, and Spanish language Spanish language, member of the Romance group of the Italic subfamily of the Indo-European family of languages (see Romance languages). The official language of Spain and 19 Latin American nations, Spanish is spoken as a first language by about 330 million persons magazines, today announced results for the fourth fiscal quarter and fiscal year ended March 31, 2005. We intend to file our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. on or about June 29, 2005. Financial Highlights: --Revenues for the fiscal year ended March 31, 2005 increased 4.1% to $536.6 million, compared to $515.7 million for the prior fiscal year. --The Company's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the fiscal year ended March 31, 2005 decreased 23.6% to $86.8 million from $113.6 million for the prior fiscal year, due in part to the significant investment in the re-launch of Star magazine. David J. Pecker David Pecker is the Chairman and CEO of American Media. He is the publisher of National Enquirer, Star, Sun, Weekly World News, Globe, Men's Fitness, Muscle and Fitness, Flex and Shape. , American Media's Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commented, "Because of greater competitive challenges, Fiscal 2005 became a year of significant re-investment for AMI. Our results reflect this and we believe we are now in a much stronger strategic position to drive growth in profitability." "As the leader in the celebrity journalism market, AMI has been the target of several new entrants that have had success with re-packaging celebrity news at a lower cover price. While the new Star glossy gloss·y adj. gloss·i·er, gloss·i·est 1. Having a smooth, shiny, lustrous surface: glossy satin. See Synonyms at sleek. 2. magazine has not been impacted, we have lost market share with our tabloids, which were down in units approximately 10% in fiscal 2005. In response to the success of these lower priced celebrity weeklies, we have just launched a new glossy title, Celebrity Living, with a cover price of $1.89, the lowest in the category. Celebrity Living focuses on the lifestyles of celebrities, with a strong emphasis on fashion and beauty products and tips, which differentiates it from other titles in the category." "We are now seeing our investment to re-launch Star as a glossy magazine pay dividends. Star's single copy unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. are up 4.0% with a $3.29 cover price through March versus the March 2004 quarter when we transitioned it from an 84 page tabloid tab·loid n. A newspaper of small format giving the news in condensed form, usually with illustrated, often sensational material. adj. 1. In summary form; condensed. 2. Lurid or sensational. with a $2.99 cover price. Advertising revenue for Star is up 57% versus the prior year and up 76% in the first quarter of fiscal 2006 versus the prior year. In addition, Star has increased its subscriptions by 210% since its launch as a glossy magazine, bringing total circulation to approximately 1.45 million, an increase of 16%. We are now in the process of re-launching the Enquirer En`quir´er n. 1. See Inquirer. Noun 1. enquirer - someone who asks a question asker, inquirer, querier, questioner to better its position in the market." "The results for the Weider acquisition continue to perform better than expected because of our ongoing efforts to improve the titles," Mr. Pecker added. "We recently redesigned and re-launched Men's Fitness Men’s Fitness is a men’s magazine published by American Media, Inc. Founded in the United States in 1987, it was originally called Sports Fitness. The premier issue featured Michael Pare from the television show, The Greatest American Hero. . As a result, advertising pages for Men's Fitness are up 6.2% from the prior fiscal year with more than 75 new advertisers, and newsstand sales have increased 29%. Shape has solidified so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. its position as the women's health Women's Health Definition Women's health is the effect of gender on disease and health that encompasses a broad range of biological and psychosocial issues. & fitness category leader and enjoys a 23% advantage in advertising pages over its nearest competitor. Ad pages for Shape are up 19% from the prior fiscal year with many new advertisers and as a result of this performance, Shape was named to the Ad Week `The Hot List' for the third year in a row." Mr. Pecker also commented on the increasing costs for subscription acquisition. "The Company's overall objective is to be more proactive in obtaining the highest quality subscriptions which requires a greater investment and that is also being reflected in our fiscal 2005 results." Revenues for the fiscal quarter ended March 31, 2005 decreased 5.7% to $137.2 million compared to $145.5 million for the prior year fiscal quarter. Advertising revenues increased 4.5% to $44.5 million while circulation revenues decreased 11.3% to $83.5 million for the fiscal quarter ended March 31, 2005. The advertising revenue increase was primarily related to the success of Star as a glossy magazine and the continuing strength of Shape. The circulation revenue decrease was primarily due to an extra issue (14th) in our fourth quarter of fiscal 2004 ($7.1 million) which was not in fiscal 2005 for the quarter (13 issues) coupled with a 5.4% decline in newsstand units for AMI's tabloid publications when compared to the prior year fiscal quarter. Revenues for the fiscal year ended March 31, 2005 increased 4.1% to $536.6 million compared to $515.7 million for the prior fiscal year. This increase was primarily related to higher advertising and circulation revenues of Star, $6.2 million (56%) and $22.6 million (28%), respectively, and increased advertising revenue from the Weider titles of $14 million compared to the prior fiscal year. These increases were partially offset by a 10.1% decline in newsstand units for AMI's tabloid publications when compared to the prior fiscal year, as well as a 4.5% decline in subscription revenue. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the fiscal quarter ended March 31, 2005 increased 8.5% to $118.4 million from $109.1 million compared to the prior year fiscal quarter. These increases in operating expenses for the fiscal quarter were primarily due to higher subscription related costs ($2.1 million), three extra days of payroll expense due to a change in our fiscal year end from March 28, 2005 to March 31, 2005 ($1 million), and an increase in advertising sales expense relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our increase in advertising revenues ($1.4 million). Total operating expenses for the fiscal year ended March 31, 2005 increased 11.9% to $449.8 million from $402.1 million compared to the prior fiscal year. These increases in operating expenses were primarily due to the increased cost structure of the Star as a glossy magazine ($27.1 million), higher subscription related costs ($3.0 million), an increase in general and administrative expenses ($9 million) including legal charges, medical insurance, facility related costs and three extra days of payroll expense due to the change in our fiscal year end, and advertising sales expense relating to our increases in advertising revenues ($4.7 million). The Company's operating income for the fiscal quarter ended March 31, 2005 decreased 48.2% to $18.8 million from $36.3 million compared to the prior year fiscal quarter. The Company's operating income for the fiscal year ended March 31, 2005 decreased 23.6% to $86.8 million from $113.6 million compared to the prior fiscal year. These decreases resulted from the circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or mentioned above, most notably the one less issue in fiscal 2005 quarter. Net loss was $2,945,000 for the fiscal quarter ended March 31, 2005 compared to net income of $11,551,000 in the prior year fiscal quarter. The decrease in net income for the fiscal quarter ended March 31, 2005 resulted from the circumstances mentioned above combined with an increase in interest expense of $6.1 million. Net income was $195,000 for the fiscal year ended March 31, 2005 compared to net income of $23,563,000 for the prior fiscal year. This decrease in net income for the period resulted from the circumstances mentioned above. In addition, an increase in interest expense of $10.5 million and an increase in depreciation expense of $3.3 million was offset by a decrease in our tax provision of $13.9 million. Debt Covenant EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become The Company's bank credit agreement requires it to be in compliance with certain maintenance covenants, which include maintaining specified leverage ratios, a consolidated interest expense ratio and a consolidated fixed charge ratio. As of March 31, 2005, the Company was in compliance with all of its covenants. Calculations of the ratios utilize Debt Covenant EBITDA. Debt Covenant EBITDA is a non-GAAP financial measure and should not be construed as a measurement of financial performance. Debt Covenant EBITDA is presented to identify add-backs to and deductions from net income as required under the terms of the credit agreement. Accordingly, Debt Covenant EBITDA is presented as it is a meaningful measurement for our debt compliance. The following table summarizes Debt Covenant EBITDA for the fiscal quarters and years ended March 29, 2004 and March 31, 2005 (dollars in 000's) and sets forth a reconciliation to net income (loss) for those periods.
(Un-audited) (Un-audited)
Fiscal Fiscal (Un-audited)
Quarter Quarter Fiscal Year Fiscal Year
Ended Ended Ended Ended
March 29, March 31, March 29, March 31,
2004 2005 2004 2005
------------ ------------ ------------ ------------
Net income (loss) $ 11,551 $ (2,945) $ 23,563 $ 195
Add -
Interest expense
(1) 17,258 23,340 75,001 85,513
Income taxes 7,477 (1,563) 14,852 1,016
Depreciation and
Amortization 10,652 11,026 40,977 44,190
Other (income)
expense, net 62 (20) 185 89
Management bonus
(2) - - 2,310 -
Restructuring
expense (3) - 2,482 2,690 2,482
Management fees 500 500 2,000 2,000
Star re-launch
and new titles
launch expenses 2,485 3,176 3,751 10,620
------------ ------------ ------------ ------------
Debt Covenant
EBITDA $ 49,985 $ 35,996 $ 165,329 $ 146,105
============ ============ ============ ============
(1) Interest expense for the fiscal year ended March 31, 2005 includes
increased interest expense of $3.7 million related to our interest
rate swap agreement versus a decline of $4.4 million in the prior
fiscal year.
(2) Net income for the fiscal year ended March 29, 2004 includes a
$2.3 million bonus as an expense granted to certain members of
management as part of the Company's recapitalization on April 17,
2003. This bonus was funded with cash contributed as part of the
recapitalization.
(3) Net income for the fiscal year ended March 29, 2004 includes $2.7
million of severance and relocation expenses relating to the
relocation of publications to our New York facility. Net income
for the fiscal quarter and year ended March 31, 2005 includes $2.5
million of severance and relocation expenses relating to the
relocation of National Enquirer to our New York facility.
The Company's Debt Covenant EBITDA for the fiscal quarter ended March 31, 2005 decreased 28.0% to $36.0 million from $50.0 million compared to the prior year fiscal quarter. This decrease resulted from the circumstances mentioned above, most notably the one less issue in fiscal 2005 quarter. The Company's Debt Covenant EBITDA for the fiscal year ended March 31, 2005 decreased 11.6% to $146.1 million from $165.3 million compared to the prior fiscal year. This decrease resulted from the circumstances mentioned above. Proposed Amendment to AMI's Bank Credit Facility: We are currently in the process of amending our bank credit facility for the remainder of the term (April 2007) to provide for less restrictive financial covenant requirements. We anticipate that this amendment will be completed by June 23, 2005. In connection with the preparation of this amendment, the Company recently has had discussions with Standard & Poor's and Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. . As a result of those discussions, the Company understands that both rating agencies are reviewing the ratings of our outstanding bank credit facility and senior subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". . We expect the rating agencies to announce the results of these reviews shortly. AMI Conference Call: The senior management of AMI will hold a conference call to discuss the Company's fiscal 2005 results on Tuesday, June 14, 2005 at 10.30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . To access the teleconference, please dial 800-721-7187, reservation number 21249069, ten minutes prior to the start time. If you cannot listen to the teleconference at its scheduled time In rallying, the Scheduled Time of any crew is the time, calculated at the beginning of the event, that they should arrive at any given control. It is different from Due Time in that Due Time is dynamic, ie it can change throughout the event as competitors drop time; whereas , there will be a replay available through June 21, 2005, which can be accessed by dialing 800-633-8284, reservation number 21249069. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This press release contains "forward-looking statements," within the meaning of federal securities laws that involve risks and uncertainties. All statements herein that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including the Company's estimates of financial performance and such things as business strategy, measures to implement strategy, competitive strengths, goals, references to future success and other events are generally forward-looking statements. The Company's actual results may differ materially from its estimates. Whether actual results, events and developments will conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the Company's expectations is subject to a number of risks and uncertainties and important factors, many of which are beyond the control of the Company. Among the risks and uncertainties which could cause the Company's actual results to differ from those contemplated by its forward looking statements are the risk that the Company may not be able to successfully develop its magazine operations to the point where these operations generate sufficient cash flow to enable the Company to meet its financial obligations, including the financial covenants under its senior credit facility; actions of rating agencies; industry and economic conditions; and the risks and uncertainties contained in the Company's periodic reports filed with the Securities and Exchange Commission. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the results, events or developments referenced herein will occur or be realized. American Media, Inc. is a leading publisher in the fields of weekly celebrity journalism and health and fitness magazines. We publish the following magazines: Star, Shape, Men's Fitness, Muscle & Fitness, Flex A development system for Flash-based applications from Adobe. Introduced in 2004 as a J2EE application, Flex compiles ActionScript code and XML-based user interface descriptions (MXML) into binary Flash files (SWF files). , Fit Pregnancy, Natural Health, Shape en Espanol, National Enquirer, Globe, National Examiner The National Examiner is a supermarket tabloid owned by the American Media Corporation. Like other tabloids, its contents have often come under question, and it has been derided for its sensationalistic writing. , Weekly World News, Sun, Country Weekly and MIRA Mira (mī`rə), [Lat.,=marvelous], variable star in the constellation Cetus; Bayer designation Omicron Ceti; 1992 position R.A. 2h19.0m, Dec. −3°05'. !, as well as other special topic magazines. In addition to print properties, AMI owns Distribution Services, Inc., the country's leading in-store magazine sales and marketing company. On April 17, 2003, we completed a series of transactions whereby principals of Evercore Partners Evercore Partners NYSE: EVR is a boutique investment bank and private equity investment firm located in New York. It was founded by Blackstone Group alumni Austin Beutner and Roger Altman in 1996. , Thomas H. Lee Partners  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . Thomas H. , L.P., David Pecker, our CEO, and other members of management recapitalized the equity of AMI in a transaction that valued the Company at $1.5 billion. Evercore Partners, based in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , manages approximately $1.3 billion of committed capital through its Evercore Capital Partners ("ECP (Enhanced Capabilities Port) See IEEE 1284. 1. ECP - Engineering Change Proposal. 2. ECP - Enhanced Capabilities Port. 3. ECP - Extended Capabilities Port. 4. ECP - Extended Concurrent Prolog. ") affiliate. ECP investments include AMI, Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). Electric Transmission Co., Telenet and Diagnostic Imaging Group. Thomas H. Lee Partners, L.P., is a Boston-based private equity firm focused on identifying and acquiring substantial ownership positions in growth companies. Founded in 1974, Thomas H. Lee Partners currently manages approximately $12 billion of committed capital, including its most recent fund, the $6.1 billion Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs H. Lee Equity Fund V. Notable transactions sponsored by the firm include: Simmons Company, Michael Foods, ProSiebenSat.1, American Media, AXIS Capital Holdings Limited, Houghton Mifflin Houghton Mifflin Company is a leading educational publisher in the United States. The company's headquarters is located in Boston's Back Bay. It publishes textbooks, instructional technology materials, assessments, reference works, and fiction and non-fiction for both young readers , TransWestern Publishing, National Waterworks waterworks: see water supply. , Endurance Endurance See also Longevity. Atalanta feminine name denotes power of endurance. [Gk. Myth.: Jobes, 148] Boston marathon famous 26-mile race held annually for long-distance runners. [Am. Pop. Culture: Misc. Specialty Insurance, Vertis, Eye Care Centers of America, Cott Corporation, United Industries, Rayovac, Fisher Scientific Fisher Scientific, formally Fisher Scientific International, Inc. and colloquially Fisher was a biotechnology company that provided products and services to the global scientific research and United States clinical laboratory markets. International, Experian, GNC GNC General Nutrition Centers GNC Gas Natural Comprimido (Argentina) GNC Guidance, Navigation, and Control GNC Grand National Championship (ATV racing) GNC Global Navigation Chart and Snapple Beverage.
AMERICAN MEDIA OPERATIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
(in thousands)
---------------------------------------------------
Three Months Ended Fiscal Year Ended
------------------------- -------------------------
(Un-audited) (Un-audited) (Un-audited)
March 29, March 31, March 29, March 31,
2004 2005 2004 2005
------------ ------------ ------------ ------------
Revenues $ 145,493 $ 137,219 $ 515,672 $ 536,621
------------ ------------ ------------ ------------
Operating expenses 98,493 104,899 358,155 403,136
Loss on insurance
settlement - - 200 -
Restructuring
expense - 2,482 2,739 2,482
Depreciation and
amortization 10,652 11,026 40,977 44,190
------------ ------------ ------------ ------------
Total operating
expenses 109,145 118,407 402,071 449,808
------------ ------------ ------------ ------------
Operating income 36,348 18,812 113,601 86,813
Interest expense (17,258) (23,340) (75,001) (85,513)
Other income
(expense), net (62) 20 (185) (89)
------------ ------------ ------------ ------------
Income (loss)
before income
taxes 19,028 (4,508) 38,415 1,211
Provision for
income taxes (7,477) 1,563 (14,852) (1,016)
------------ ------------ ------------ ------------
Net income (loss) $ 11,551 $ (2,945) $ 23,563 $ 195
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